Feature

Beneath the Surface

The United States holds enough oil and gas to power the country for hundreds of years, and Colorado is at the center of the search for energy resources. Using a controversial process called hydraulic fracturing—better known as fracking—and new drilling techniques, oil and gas companies are able to extract these previously inaccessible fossil fuels. These technologies may be the biggest step yet toward securing our energy independence. But at what cost?

December 2012

Split Estate

How one family confronted fracking—and lost. 

it was afternoon when Carol Bell first noticed the stake. She had just returned home from a trip to the grocery store. The wooden post protruded from the dirt not more than a few feet. There was a small orange flag near the top of the stake, which was just footsteps from a horse barn owned by Carol and her husband, Orlyn, and a few hundred feet from their home, both located on the Bells’ 110-acre ranch in Silt, Colorado. Carol felt ill the moment she saw the stake. It seemed that someone had fired a warning shot, unmistakably meant to convey one thing: We can do whatever we want.

In a way, Carol knew this was coming. Months earlier, a representative of Encana Oil & Gas (USA) Inc. knocked on the Bells’ door and delivered the news. Like many landowners in Colorado, and across the country, the Bells owned the surface rights to their land, but not the rights to the subsurface minerals. Encana had leased the rights to those minerals and intended to drill on the ranch to extract natural gas beneath the ground. The Bells would have to provide Encana with “reasonable” access to the property. 

Carol and Orlyn were worried. They weren’t anti-drilling, but derricks had been popping up all over Garfield County, and some residents were already complaining about the smell and the noise. But Encana was willing to negotiate, and the Bells figured they could find common ground. Then, Carol noticed the stake with the orange flag. It appeared that Encana didn’t intend to drill in some far-flung corner of the ranch; rather, it wanted to drill a few paces from the barn. Nothing about the location seemed “reasonable” to Carol. 

The two parties—operator and landowner—set out to negotiate a surface use agreement, a contract that would indicate, among other things, where Encana would drill, how it would access the drill site, and what, if any, financial compensation the company would pay the Bells. The Colorado Oil and Gas Conservation Commission (COGCC), the agency that regulates drilling in the state, requires that operators consult with landowners before drilling. In negotiating with the Bells, Encana agreed to move the well pad away from the barn. The company also agreed, according to the Bells, to pay $2,500 per acre for access to the land. (Encana does not disclose specific amounts paid to landowners per company policy, but an Encana spokesperson says the Bells were paid “tens of thousands of dollars.”)

The Bells argued that the $2,500-per-acre offer would not cover the loss in value of their land. In response, they received a three-page letter from Encana that, in part, stated: “We believe we have fully satisfied Colorado law…where the Colorado courts recognize that ‘the owner of severed mineral estate or lessee is privileged to access the surface and use that portion of the surface estate that is reasonably necessary to develop the severed mineral interest.’ ”

The final paragraph of the letter read: “Encana will not delay drilling these wells to further dispute the compensation matter.” Translation: This was the best deal the Bells were going to get—a deal Encana thought was more than reasonable. “We always try to take a fair approach,” says Encana public relations director Doug Hock. “I know they weren’t happy, but I think at the end of the day, it’s one of those things—we weren’t going to make them happy. Sometimes in business deals, that happens. The people who have production on their property—they’re having to put up with, let’s face it, a nuisance.” 

Carol describes what followed those initial negotiations not as a nuisance, but as years of heartache. The traffic and noise were, at times, unbearable. It’s “like you’re inside a jet engine,” Orlyn says. The Bells say the air frequently smelled of gasoline. “They were putting out a lot of crap that we were breathing,” Carol says. There was a spill. Carol thinks it was diesel fuel; she took pictures to document what happened. She says it took days until someone cleaned up the mess—only for another spill to occur, and this time, she says, it was fracking fluid. Even the comparably little things were bothersome. More than once, a truck headed for the drill site on the ranch knocked over the Bells’ mailbox. Before the oil and gas development on the ranch, elk roamed the property, but after the drilling started, Carol says she didn’t see the animals anymore. 

Carol traveled to Washington, D.C., to advocate for stricter regulation of oil and gas development, and she joined a local group that was also advocating for stricter regulation. She remembers at one point sitting around a table with a few friends and wondering, “Where is our Erin Brockovich?” But there was no Brockovich, and after three years, the Bells grew tired of fighting. The arrangement had changed their lifestyle. “You couldn’t look anywhere and not see them,” Carol says. So they started to talk about selling the property. The Bells had always talked about moving, but it wasn’t supposed to happen like this; they had wanted to stay on the ranch for another few years. 

Word traveled fast. Before the Bells officially listed the land for sale, they had an offer. Ironically, a local man who worked for Encana purchased the ranch. The Bells moved to Fort Collins, where they live now. Seated in their living room, Carol recalls the struggle. She feels remorse for having left the community that she and her husband were part of for a quarter of a century. “When you realize you have no power,” Carol says, “giving up is a little easier.”

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History Lesson

The genesis of split estates. 

 The concept of a split estate—a situation in which someone owns the surface rights to a piece of land and someone else owns the rights to the subsurface minerals—dates to the American Civil War. That’s when president Abraham Lincoln signed the Homestead Act of 1862, which offered chunks of Western land to anyone who physically claimed the property. But in the early 1900s, Congress realized the minerals beneath the land it was handing out were valuable, and the government started to retain the rights to the minerals. Today, the Bureau of Land Management (BLM) holds about 700 million acres of mineral rights, about 29 million of which are in Colorado. “It certainly is surprising to some,” says Denver-based attorney Jack Luellen. “You go out and buy a house in Greeley, and I think most people don’t know that anything below the house may not be theirs.” 

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